Articles Posted in Uncategorized

This week, New Jersey-based PHH Corp. announced it settled with the U.S. Department of Justice (“DOJ”) to resolve the allegations brought forth by a whistleblower concerning fraudulent mortgage origination and underwriting practices. To resolve the allegations, the company will pay approximately $75 million to the DOJ.

PHH added that the settlement agreements cover mortgage loans insured by the Federal Housing Administration (“FHA”) during the period between Jan. 1, 2006 and Dec. 31, 2011, some mortgage loans insured by the VA, and mortgage loans sold to Freddie Mac and Fannie Mae.

Much of the information covered by the settlement was provided by an employee-turned-whistleblower. False Claims Act (“FCA”) cases often hinge around information gathered from corporate whistleblowers who file lawsuits against their employers who are thought to have committed fraud against the government.

LAZ Parking (“LAZ”), hired by the Massachusetts Bay Transportation Authority (“MBTA”) to operate and manage parking lots in Greater Boston, will pay $5.6 million to settle allegations that it failed to detect and deter theft of millions of dollars of cash revenue belonging to the MBTA. LAZ owns or operates hundreds of thousands of parking slots in more than 2,500 locations.

According to the settlement agreement announced by Massachusetts Attorney General Maura Healey, LAZ Parking has agreed to pay $1.1 million to the Commonwealth to resolve allegations that its failure to implement contractually-required controls and auditing tools at thirteen state-owned MBTA parking lots resulted significant revenue losses in violation of the Massachusetts False Claims Act and Consumer Protection Act.

LAZ has also agreed to pay the MBTA an additional $4.5 million to settle a May 2017 lawsuit filed by the MBTA claiming LAZ breached its contract.

Federal prosecutors announced a multi-million-dollar settlement today with The Medical Center of Central Georgia and Navicent Health (“Navicent”) over alleged False Claims Act (“FCA”) violations. Under the terms of the settlement, Navicent has agreed to pay to the United States and the State of Georgia $2,549,742 to resolve allegations that it violated the False Claims Act and the Georgia False Medicaid Claims Act by submitting bills for ambulance transports that were inflated or medically unnecessary, and were often both.

The settlement signals the completion of a two-year government inquiry into Navicent’s ambulance billing practices. The investigation was initiated when an employee-turned-whistleblower “tipped-off” government authorities about the ambulance billing fraud. Information provided by Andre Valentine, the whistleblower, and fruits of the government investigation revealed two suspected schemes through which Navicent allegedly violated the FCA and the Georgia False Medicaid Claims Act.

The investigation originated with a lawsuit filed by Andre Valentine, a former Navicent paramedic, under the whistleblower provisions of the False Claims Act and the Georgia False Medicaid Claims Act. These statutes allow private citizens to bring civil actions on behalf of the Government and share in any recovery obtained. Suits are filed “under seal,” or “in secret” with the state or federal court, informing authorities of the fraud, and while inspectors investigate allegations brought forward by whistleblowers.

Celgene Corporation, a pharmaceuticals manufacturer headquartered in Summit, New Jersey will pay $280 million to settle fraud allegations related to the “off-label” promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration (“FDA”). Celgene is a biopharmaceutical company involved primarily in the development of therapies for the treatment of cancer and inflammatory diseases.

The settlement resolves a lawsuit that alleged Celgene violated the federal False Claims Act by submitting false claims to Medicare. The suit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state healthcare programs.

The Celgene litigation was initiated under the qui tam (“whistleblower”) provisions of the False Claims Act and similar whistleblower laws of the District of Columbia and 28 states.

Dr. James Norman, the owner and operator of the Norman Parathyroid Center has agreed to pay $4 million to resolve allegations that he violated the False Claims Act (“FCA”) by knowingly engaging in various unlawful billing practices with respect to Medicare and other federal health care programs and their beneficiaries. The government alleged that Dr. Norman pocketed hundreds of thousands of dollars as a result of the fraud.

The settlement concludes a lawsuit originally filed by a former patient of Dr. Norman, Myra Gross, and her husband, Dr. David Gross, in the United States District Court for the Middle District of Florida.

Norman claims to have invented “minimally invasive” parathyroid surgery in the 1990s and claims he is the world’s most experienced parathyroid surgeon. His website states that he has performed more than 21,000 operations.

Foundations Health Solutions (“FHS”), Olympia Therapy (“Olympia”), and Tridia Hospice Care (“Tridia”), Ohio-based healthcare companies, and their executives, Brian Colleran and Daniel Parker, recently agreed to pay approximately $19.5 million to resolve allegations relating to the the submission of false claims for medically unnecessary therapy and end-of-life hospice services to Medicare and the State of Ohio’s Medicaid program.

The lawsuits were filed under the qui tam, or “whistleblower,” provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims.

The False Claims Act (“FCA”) was enacted in 1863 by a Congress concerned that suppliers of goods to the Union Army during the Civil War were defrauding the Army. The FCA originally provided that any person who “knowingly submitted false claims to the government” was liable for double the government’s damages plus a penalty of $2,000 for each false claim.

Last week, the U.S. Department of Justice announced that the United States has settled fraud allegations against Prospect Mortgage Company (“Prospect”) branching from Prospect’s enrollment and participation in the Direct Endorsement Lender Program (“DE program”). These claims settle allegations of False Claims Act (“FCA”) violations.

The False Claims Act is a federal statute, enacted in the wake of the U.S. Civil War, that allows whistleblowers, or “relators,” to bring qui tam lawsuits on behalf of the United States government and against their employers who commit fraud against the government.

The lawsuits are initially kept secret, or “sealed” while the government investigates fraud alleged by the whistleblower.

The Department of Justice announced a settlement in unique case advancing a uncommon theory of recovery for False Claims Act (“FCA”) lawsuits. CA Inc., (“CA”), agreed to pay $45 million to resolve allegations brought by a whistleblower under the FCA.

CA’s settlement further cements the government’s commitment to routing out fraud with the help of “whistleblowing” employees. People with information about frauds against the government stand to benefit significantly financially, and may disrupt immoral and dishonest practices. Dani Shemesh, the former employee of CA Software LTD that filed the suit in 2014, will receive $10,195,000 for the information she provided.

Shemesh alleged that CA Software made false representations and claims in the negotiation and performance of a General Services Administration (“GSA”) software and licensing contract.

A False Claims Act lawsuit unsealed last year in Southern California U.S. Attorney for the Central District of California announced that her office elected to intervene in a False Claims Act lawsuit alleging rampant Medicare fraud at a group of Southern California hospitals. The suit was first “unsealed” in late 2016.

The whistleblower (or “relator”) in this case, the former Director of Quality and Risk Management at Prime Healthcare Services, Inc., alleges that her employer defrauded the federal government of nearly $50 million dollars by billing for “medically unnecessary” inpatient short-stay admissions.

Prime Health owns and operates 14 hospitals throughout Central and Southern California. The whistleblower alleges that fraudulent billing practices occur across the Prime Health system.

A New Hampshire contractor and Haverhill, Massachusetts subcontractors will pay $420,000 after settling allegations of submitting false and inflated payment requests for MBTA renovations. The case indicates that crackdowns on illegal practices in construction for the government are on the rise. S&R Construction, its president Stephen Early, subcontractor A&S Electrical, and its manager Gregory Lane, will be collectively responsible for repaying the Commonwealth.

The False Claims Act, a law that provides protections for “whistleblowers” who come forward with information not previously known to the government about waste or financial fraud on taxpayers, has become the primary statutory remedy for the government to recover ill-gotten funds. In 2016, the government prosecuted healthcare, defense, and contracting frauds through the FCA, collecting $4.7 billion.

Though the FCA has been law since after the American Civil War, and was passed after rampant frauds on the government enraged citizens, its use as changed throughout its existence. Originally, businessmen with lucrative contracts were dubbed “war hogs” by the American press, and the contracts that made them rich amounted to agreements with the union army to supply goods and services that were oftentimes nonexistent or subpar, despite being paid handily.